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The optimal amount of capital and labor used by a firm in the production process is usually obtained by the technique of cost minimization, rather than amximizing the level of output produced.
a) Explain why this is usually true using isoquants and an isocost curve.
b) Explain and show graphically why this many not be true for a perfectly competitive firm.
c) Under what conditions will cost minimization and maximizing the level of output produced, yield the same amount of output? Explain and show graphically.
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